Topic: Hype cycle or Bubble Mania? (Read 5371 times)

This wikipedia entry is illuminating - https://en.wikipedia.org/wiki/Stock_market_bubble Especially if you draw a straight line under either the NASDAQ or Nikkei index for the pre-rally prices preceding the dot-com bubble. Prices inflate, reach a euphoric peak, then decline to previous levels.

There are exceptions where the 'previous level' ends up being a complete lack of confidence in the investment itself, so is manifested by a zero price valuation, but those are fairly rare. You do see this kind of behavior in thinly traded issues like 'pink sheet' penny stocks and other highly speculative investments.

That is why I say we're not in any bubble, or have been, because we would be trading around the inception price of bitcoin -- or at zero.

We most certainly have had run-ups and blow off peaks, but you get those in commodities and other markets as well. Such as the summer run-up of wheat during the severe drought in the USA.

I have no issue with the Gartner model, just that correlating it to price movement doesn't make any sense. It is meant as a general representation versus a literal one - ie., you can't say we start at 0.25, swing up to 40, then stay at 12 forever on a gradual up-slope.

These charts are not helpful.  Technical Analysis is barely helpful.

Look at fundamentals and you'll see Bitcoin is a long, long hold.  Comparing Bitcoin to various iPods isn't even close to what you need to be doing.

What you need to do is this.  Imagine the world before the discovery of gold.  Now imagine a few civilizations are using gold for trade.  Then imagine everything that came after that.

Bitcoin is roughly at the initial stage where for the vast majority of the world, they are before the discovery of Bitcoin.  If you can accumulate 1,000 BTC or so and wait 50 years... there is a distinct possibility that you'll find yourself at the top of a very, very tall mountain.  This would be my plan.

Adjust everything for inflation.

At $1,000 per BTC, sell 100 and buy a new house.

At $10,000 per BTC, sell 100 and buy a new house.

At $100,000 per BTC, sell 100 and open several successful franchises, McDonalds, Taco Bell... etc...

At $1,000,000 per BTC, 100 and purchase an enormous annuity.

Spend the rest in small amounts as needed.

You've got to understand how quickly this can happen.  This isn't a matter of it happening over the course of 5,000 years; it can happen in our lifetimes.  Or Bitcoin will become nothing... and you lose 11 grand in 2012 dollars.

1. What definition of "bubble" do you use? (link?) I guess there are different views on what a bubble is and whether prices have to go down to zero in succession.

2. I think the Gartner model fits almost perfectly (to this point in time) and will provide guidance in the future as well should fundamentals change (as they most likely will, --> see wordpress.com).

In strict terms, we haven't had a bubble - but I keep seeing the term being thrown around without any regard to what a market bubble really is.

If we had a bubble at any point - bitcoin would be under a dollar and hovering somewhere between 0 - 0.25 or less. That is what happens to bubble markets, total loss of confidence and it remains stagnating where it began.

Apple has a product dev cycle, which is also not strictly a bubble. Can their stock go down to zero? Unlikely, but it can fluctuate quite a bit - such as being near the 6-month lows as they are now.

Can bitcoin be hyped and have manic phases of price increase? Sure, but you have to consider the yardstick you're using to measure bitcoin's 'worth' is also changing. We're in perpetual QE now, so when the currency is debased by various means and fancy financial acronyms, it will affect how we measure the price of bitcoin.

Some of the metrics that make sense to compare are month-over-month and year-over-year volume and transaction trends, merchant adoption, and tools that increase bitcoin ease-of-use and spending velocity.

While the gartner cycle is illustrative of certain phases, I don't think you can directly relate it to a price comparison of bitcoin.

Sounds funny, what does he sing?

https://www.youtube.com/watch?v=Os1t_n5-joA
  (Russian laugh over this system sales. (HYIP method of sale). But continue to buy.)

I said (at least I thought I did), that we are here while riding the current hype cycle. With a change of fundamentals, like increased demand (lets say amazon adopts bitcoin) a new hype cycle will start on top of the old one (see apple hype cycle chart on 1st page).

In other words: If nothing changes, we are here (see arrow).

I certainly expect things to change though.

we are not here, cause the apple-product selling reached market saturation, while bitcoin has functions of a currency.
a comparision is hard to make, I guess the use of bitcoin will explode in future!

I meant that we should once again retest 7.2 before the next bubble inflates.

Its both true, the graph stands for visiblity in the media, as well as it relates to expectations which in case of bitcoin translates to price (based on its make up that consists in large parts of speculation). They also state that relation in their book "Mastering the Hype Cycle", see OP.



Not sure what you want to say here.

Interesting topic ...
Add my 5 cents: Why not, for example? That is like a corkscrew ...

Actually, I think we should not draw a line that relates to 'visibility' over a graph that relates to 'price'. The described cycle has more to do with development and spreading of new technology than the price of controlling a single Bitcoin in the blockchain.

Bitcoin still has some years to go through before getting mainstream.

Apple is like that south park episode with the prius drivers generating too much smug. Eventually people wise up. Bitcoin does not allow huge amounts of smug and therefore will not gain mass appeal until a superstar sensation makes it cool. If only justin beiber's fan club made dues paid in btc mandatory bitcoin would be cooking with gas. Until then sheldon says neiner neiner.

So, next topic: Where are we and where will we go from here?

This is how I see it:





I think we will oscillate between 10-20$ while on the plateau and skyrocket with the next big positive fundamental change to relive the hype cycle once more (probably a bit dampened).

Thoughts?

Given the pie is a success that creates demand for all its ingredients in order to bake it, it also creates additional demand for the berries thus raises their value.




The icon leader? Maybe. (Saint Satoshi??)
Apple combines available technologies to make easy to use products.
Bitcoin combines those as well. Easy to use? On its way.

Apple lowered to barrier of entry to having a home computer back in the day.
Bitcoin lowers the barrier for fund raising, remittance, investing/speculating, money transfers, selling drugs,..

Apple had aggressive, creative advertisement
Bitcoin has the financial crisis that advertises alternative currencies on its own, combined with an ardent community that spreads the word

Apple was at the beginning of the age of computer mass production
Bitcoin is at the beginning of the age of mass mobile/digital payments


I strongly disagree. Bitcoin needs no central planning. Its decentralization is its strenght. It may not channel all available resources as efficiently as a central steering committee, but is much more innovative and resilient against wrong decisions due to its multitude of contributers and pillars.
No central committee needed, only good applications.


Agreed for its open source mentality, but also many parallels to what Apple does can be drawn (see above).

It was fun for a while, too bad it blew up.

Drama was worth it though.

I agree with the last poster. A character like Steve Jobs does marketing that cannot be bought with any amount of money.

Bruce Wagner tried.....

Not so sure. Not everything about the pie is related to berries.
It's quite possible the pie is less tasty than just the berries or that it can be tasty without tehe berries.
This will only partially affect berry value and the berry value will never reach the same peak as with the original discovery.
That doesnt take away from the posibility of the pie making a whole hype hump all of its own. It's more a queston of how much influence that has on the berries themselfs.

Well, apple is pretty special in the way they can build hype on hype.
They were really in the right place at the right time with a star figure as a CEO.
And they worked that opportunity very well.
Bitcoin misses a lot of the properties that apple possessed at the end of the 90's.

So i think we need a different strategy instead of hoping some of the success of apple wil rub off.
For one, upholding the kind of 'buffer' you refer to is a task that has to be attended to.
It would require a (hopefully democratic) body that regulates parts of the community.
Now go and see how that will be received by the majority of bitcoin users
And of course the lack of this kind of regulating body is a major stumbling block for bitcoin growth.
FIAT will have to come down a lot more before people will look for alternatives en masse. Most people are heavily invested in the fiat economies and moving out is usually out of the question.
Bitcoin is more like Linux than like Apple.
Most people dont like it because it has too many features they don't understand, but anyone who understands comuters realy well will tend to like it for those same features.
So in a way you would be preaching to the choir.

..now imagine Charlie finds a way to bake delicious berry pie from those berries! The whole process starts over again.



No, unless they come up with even more awesome products every time, they will crash just like any other hype cycle. What they will achieve however, is to build some buffer from the value already generated by their earlier products, that have climbed the plateau of productivity already. The total value of AAPL shares is comprised of all Hype Cycles, old and new ones:



All the different hype cycles add up, so when the newest one fails, it falls soflty.

I just posted about this in another thread but I didn't post the link. For those who don't think Bitcoin has a possibility of bringing huge innovations in waves(kinda like the Apple graph), you might not have heard of some of the interesting things built into the Bitcoin protocol. "Smart Property" and "Contracts" are the ones that I am most interested in. Here Mike Hearn explains...
http://www.youtube.com/watch?v=mD4L7xDNCmA